Limulus amebocyte lysate forms a gel when exposed to minute quantities of endotoxin. This.unique property allowed the development of a sensitive assay for the detection of contaminating pyrogens in biological products. Our laboratory has been investigating the enzymatic mechanism of the lysate gelation. In the current study, using affinity columns of endotoxins and ion exchange chromatography a 12 kD protein with high affinity to endotoxins was isolated and purified. Binding studies with I-125-labeled 12 kD protein showed that the binding required the integrity of the endotoxin molecule to form the complex and that the lipid A moiety is essential but not sufficient to form the complex by itself. The gene coding for the 12 kD protein has also been isolated and sequenced. It contains a 31 amino acids signal sequence and a coding region for additional 104 amino acids. We propose that the 12 kD protein is one of the endotoxin binding proteins which form the defense mechanism to protect HSC against bacterial infections.